Does female human capital constrain earning management: The case of the United Kingdom

Abstract

This paper examines how the presence of female directors on corporate boards influences the practice of real and accrual earning management in U.K. firms. We account for the endogeneity of a range of corporate governance measures, including female board representation, with regards to earning management and demonstrate that ignoring this problem may lead to perverse results. We find that female board representation constrains both forms of earning management. Our results provide evidence that female directors bring considerable and diverse human capital, enhance board monitoring and contribute to a qualitative shift in the decision‐making process in the boardroom. We suggest that boards’ gender diversity and earning management is an overlooked area in the United Kingdom and globally and may require the attention of regulators.

Does performance persistence below aspirations affect firms' accounting information disclosure strategies? An empirical study based on reliability and comparability

“…Scholars have long considered the disclosure of high‐quality accounting information (e.g., less earnings management and higher accounting information comparability) as a key aspect of corporate business ethics (Ali Aribi et al, 2021; Poje & Groff, 2022). High‐quality accounting information can not only effectively alleviate information asymmetry between different market players (e.g., shareholders and executives) (Lee & Masulis, 2009), but can also provide a basis for external investors to monitor and evaluate executives' performance (Xiong et al, 2021).…”

“…However, in management practice, companies, especially those in emerging economies, often disregard business ethics and purposefully disclose low‐quality accounting information (Ran et al, 2015; Xiong et al, 2021). Previous studies have recognized that a firm's prior performance may have a significant impact on its accounting information disclosure strategy (Aribi et al, 2021; Ran et al, 2015; Velte, 2021). However, previous studies are limited to absolute performance levels and have not yielded consistent findings (Aribi et al, 2021; Velte, 2021; Zhong, Ren, & Song, 2022).…”

“…Previous studies have recognized that a firm's prior performance may have a significant impact on its accounting information disclosure strategy (Aribi et al, 2021; Ran et al, 2015; Velte, 2021). However, previous studies are limited to absolute performance levels and have not yielded consistent findings (Aribi et al, 2021; Velte, 2021; Zhong, Ren, & Song, 2022).…”

“…This study makes several marginal contributions. First, it provides the first theoretical model to interpret firms' accounting information disclosure strategies from a PPBA perspective, thus deepening our understanding of the antecedents of firms' accounting information disclosure strategies (Aribi et al, 2021; Ran et al, 2015; Velte, 2021). In addition, we provide a more detailed analysis of corporate accounting information disclosure strategies from both the reliability and comparability perspectives, thus expanding the existing literature on corporate accounting information disclosures.…”

The incidence of accounting fraud is increasing: is it a matter of the gender of chief financial officers?

“…However, despite the importance of CFOs in modern corporations (Xu et al , 2019), organisational researchers have largely ignored the central role of the CFO as a key decision maker (Vähämaa, 2017). Moreover, many prior studies examine whether executives’ gender-based psychological differences influence firm risk-taking behaviour, but the results of these studies are not conclusive (Duong and Pallasch, 2021; Ali Aribi et al , 2021; Brinkhuis and Scholtens, 2018). We address this omission and advance research on the impact of CFOs on corporate misconduct (Ham et al , 2017), by examining whether CFO gender affects financial misreporting or accounting fraud.…”